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Rep. Kirsten Gillibrand is applauded at a news conference in Albany, N.Y., Friday, Jan. 23, 2009 by New York Gov. David Paterson, left, and Sen. Charles Schumer, D-N.Y. Paterson announced that he is appointing Gillibrand to fill the U.S. Senate seat left vacant by the departure of Hillary Rodham Clinton.

Murphy is GOP's next tax target

In the wake of recent tax flaps surrounding Obama administration nominees, Republicans are zeroing in on another Democrat with a complicated personal tax history — Scott Murphy, the nominee for Kirsten Gillibrand’s vacant House seat in New York.

Murphy has been the Democratic nominee for less than a week, but already he finds himself on the defensive for not paying thousands of dollars in taxes on a start-up computer software company he owned more than a decade ago.

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A venture capitalist with no experience in elective politics, Murphy is running against Republican state Assembly Minority Leader James Tedisco, in the upcoming special election in New York’s Hudson Valley-based 20th District. The date for the contest has not been an-nounced.

For Republicans, the election presents an important first test of their competitiveness in the Obama era. The district, one of the most Republican seats in New York, was a longtime GOP stronghold prior to Gillibrand’s upset victory in 2006. In a sign of the party’s acute interest in the outcome, newly elected Republican National Committee Chairman Michael Steele met with Tedisco in Albany Wednesday, just days after his election as GOP chief.

Within hours of Tedisco’s nomination Sunday, the National Republican Congressional Committee blasted Murphy for his start-up company’s failure to pay $21,000 in taxes on time — a charge with added resonance in light of the tax troubles of recent Obama administration ap-pointees.

“Now that he is a candidate for public office, Scott Murphy should start explaining his questionable history when it comes to issues of taxes and past business dealings,” said National Republican Congressional Committee Communications Director Ken Spain.

Murphy said the charges are a distortion — and a distraction from his record of creating jobs in New York. He explained that the compa-ny, Small World Software, was under new management when the tax liens were issued and that he had no responsibility for paying the compa-ny’s corporate taxes.

“The tax lien was something the new management did after I sold the company. I sold my company to a larger company, and I did work there, but I wasn’t responsible for taxes and accounting,” Murphy said.

But according to copies of tax documents provided to Politico, two of the tax liens (totaling $744) were issued prior to the company’s merger with IXL Inc. in January 1998. And the third lien for unpaid sales tax, which totaled $20,800, covered a time period when the company was under Murphy’s management.

The $20,800 lien was paid off five months late in December 1999, but the two smaller liens are still due.

Tedisco has seized on the controversy, saying he was eager to contrast Murphy’s business background with his own working-class roots. He compared his opponent’s tax troubles with the tax problems that have dogged Obama administration nominees, including former Sen. Tom Daschle (D-S.D.) and Treasury Secretary Tim Geithner, as well as House Ways and Means Chairman Charles B. Rangel (D-N.Y.).

“What concerns me is the pattern on the other side of the aisle — Mr. Rangel didn’t pay his taxes, and neither did Mr. Geithner or Mr. Daschle, and now Scott Murphy has a record of saying he’s been creating jobs and hasn’t paid his taxes,” said Tedisco. “I think there’s a pattern there.”